Despite the protestations of critics, Shadow Treasurer Chris Bowen has said the Opposition will stand strong on its policy to eliminate franking credits if it wins the next federal election.
The controversial proposal would see franking credits – which allow Australian companies to pass on tax payments as credits to shareholders – scrapped.
Speaking exclusively to Your Money’s Ticky Fullerton, Bowen said contrary to the arguments put forward by opponents, the uniquely Australian mechanism is nothing more than a tax leak.
“When you provide a refund to the shareholder for the tax paid by the company, that’s not double taxation, that’s zero taxation,” Bowen said.
“Nor should we have a distortionary tax system which encourages people to go overweight in Aussie equities,” he added.
Bowen said that he had had conversations with some of the beneficiaries of the scheme who had said it had to go.
“[They have said to me] ‘I know it’s not sustainable, I know it’s not fair, there are better things to do with this government money than provide me with a tax refund when I haven’t paid income tax,'” Bowen said, describing conversations he had had.
While the most outspoken opponent to the Labor policy, fund manager Geoff Wilson, has circulated a petition he claims has tens of thousands of signatures in support of franking credits, Bowen said he would not budge.
“We put the policy out very, very clearly, [and] we’re seeking a mandate for it. Again, not just before an election, but before multiple by-elections as well.”
Tune in to TICKY at 5pm on Monday for the full interview with Chris Bowen or follow live at https://www.yourmoney.com.au/watch/live/